Billionaire Donors And Kalamazoo’s Foundation For Excellence

Updated on 1-24-19 after speaking with the City Manager of Kalamazoo Jim Ritsema and his staff.

Two Billionaires with ties to Kalamazoo, William Parfet and William Johnston bailed out the city of Kalamazoo back in 2016 when they cut the city checks totaling $70.3 million.

Because of those donations the city did not have to increase fees and/or cut services due to the budget shortfall of the city that year. I was told by city management that the budget shortfall was due to structural debt left to them by prior administrations and what they call a “failed municipal funding model”. They said the failed municipal funding model is made up of “state revenue sharing, stagnant local property tax income (which is statutorily maxed at its cap) and increased cost and liabilities”. They also told me that the shortfall was not to due to overall spending increases but due to the model and increases in cost of living and inflation.

Great that these billionaires donated that money to the city to save the citizens of Kalamazoo some money from yet another fee increase and/or cut services. The concern I have is that by doing so they allowed the city to not have to address their problem of this structural debt left to them by previous administrations which could lead to budget shortfalls once again.

Now, according to Mlive these same billionaires have promised to once again bailout the city if the cities $500 million dollar donation campaign does not collect enough cash by the end of 2019, according to city staff.

How successful has the campaign been; well as of Jan. 10, only $39,931 of the $500 million has been raised. I completely understand that it has only been 10 days and apparently the city has sought only small donations from residents when summer taxes were due back in 2017. The foundation tasked with acquiring the donations is the Foundation for Excellence, their Coordinator Steven Brown has stated that the average resident was “never” expected to fund the foundation fully.

I was informed by city management that the Foundation For Excellence has three buckets that the funds will be placed and/or spent. They are:

backfill lost property taxes due to the millage reduction

budget stabilization

and aspirational projects to support IK 2025 and Shared Prosperity Kalamazoo.

It sounds to me like the problem that should also be looked at is this structural debt, or perhaps they have and there is nothing that can be done. Thus bucket #2 “budget stabilization” sounds like donations backfilling shortfalls.